ReSolution | Nov 2017 14
Effect of apologies on insurance cover
Insurance policies often contain clauses prohibiting the admission of fault by an insured without the insurer’s consent. In practice, to date, insurers in Hong Kong tend to agree apologies only in limited circumstances (for example where there has been a clear breach). In complex claims in particular, insurers are likely to counsel against (early) “without prejudice” apologies. The fear that making an apology would adversely affect the apology maker’s insurance cover was identified by the Steering Committee as a real and significant barrier to apologies in Hong Kong. Clause 10 of the Apology Law removes this barrier by providing that an apology will not void or affect insurance cover, compensation or other benefit for any person in connection with the insurance. It matters not if the policy in question is governed by another law: if Hong Kong is the place of the litigation, tribunal or regulatory proceedings, the apology will be protected and insurance cover will not be affected. This again highlights the desire of the legislature to make Hong Kong a popular venue for dispute resolution. Insurance companies, regardless of the substantive law covering their contracts of insurance/indemnity, should take clause 10 on board.
Effect of apologies on limitation periods
Under the Limitation Ordinance (Cap 347), certain rights of action relating to land, personal property, and debts are deemed to accrue on the date of acknowledgment. Clause 9 of the Apology Law states that apologies will not constitute acknowledgements of rights of action for tolling purposes under the Limitation Ordinance (Cap 347).
Again, parties and lawyers should be cognisant of this development. In keeping with other provisions, it focuses on reducing perceived disincentives to offering apologies, by extending time for limitation purposes. In Canada, detailed legislation was required to address tolling for the purposes of its apology laws and it will be interesting to see whether this light touch amendment causes any issues in practice or results in satellite litigation.
Interplay with mediation and without prejudice negotiation
The Apology Law forms part of the government’s policy to encourage the wider use of mediation to resolve disputes. The law does not directly impact mediation, where apologies, admissions and all other statements are already protected from admissibility in other proceedings by confidentiality provisions under the Mediation Ordinance (Cap 620). This is reinforced by the common law doctrine of without prejudice privilege, which protects mediation and without prejudice negotiations.
The Apology Law is really of most relevance outside of the mediation/without prejudice negotiation context in that it makes otherwise open and admissible statements automatically inadmissible. It is possible that, in making such an apology, the parties proceed on a more conciliatory footing rendering them amenable to mediation. It will certainly be interesting to see whether there is an uptick in mediation in light of the Apology Law.
Conclusion
In becoming the first jurisdiction in Asia to enact apology legislation, the law may help to further enhance Hong Kong’s position as a centre for international dispute resolution in the Asia Pacific region. Apologies certainly can enhance the chances of settlement, when made in the right circumstances and at an appropriate time.
Research showing the efficacy of apologies in reducing subsequent legal suits is most prevalent in healthcare and personal injury disputes. The challenge for Hong Kong will be to ensure that this potentially powerful law (particularly for defendants) is adequately promoted and understood by all stakeholders to the dispute resolution community. The government is planning certain education activities in this regard.
At worst, the legislation could lead to ‘hollow’ or tactical apologies that seek to pressurise complainants to settle on less advantageous terms. A (potential) defendant is safe in the knowledge that there will be no legal downsides in admitting fault. A complainant/plaintiff, on the other hand, armed with an open admission of fault by his or her counterparty, cannot use this to their advantage should the dispute not settle. This issue highlights the complexities of apology legislation and the potential scope for misuse. It is hoped that the drafting of the Apology Law, which has been subject to thorough scrutiny and careful drafting, strikes the right balance and prompts genuine apologies and attempts to settle.
APOLOGY LEGISLATION PASSED IN HONG KONG – WHAT DOES IT MEAN FOR YOU? - Cont...
Reasons for reasons
Background
In the late nineteenth century, the Crown acquired from Māori certain ancestral lands near Rotorua known as Whakarewarewa and Arikikapakapa.
In 2008, immediately following a critical report by the Waitangi Tribunal, the Crown agreed to return the lands to Ngāti Hurungaterangi, Ngāti Taeotu me Ngāti Te Kahu o Ngāti Whakaue (Ngāti Whakaue) and those hapū comprising Tuhourangi Ngāti Wahiao (Ngāti Wahiao). However, Ngāti Whakaue and Ngāti Wahiao were unable to agree on which of them was entitled to the lands. Each claimed exclusive beneficial ownership. They were unable to settle their differences and an arbitral panel was later convened pursuant to the Trust Deed to determine the competing rights of beneficial ownership according to mana whenua.
The arbitral tribunal held hearings over 13 sitting days between November 2012 and May 2013. The competing iwi were represented by legal counsel. Extensive evidence was called of both an oral and documentary nature.
The tribunal’s interim decision was delivered a month later on 7 June 2013 and adopted in whole as the final award delivered on 14 November 2014. The arbitral tribunal’s reasons for its finding that the three Ngāti Whakaue hapū, the three Ngāti Wahiao hapū and the beneficiaries of the Trust were eligible to be final beneficiaries but that the Tuhourangi Tribunal Authority was not, were contained in five paragraphs under the heading ‘Conclusion’.
Ngāti Whakaue was dissatisfied and challenged the award in the High Court for error of law. In 2014 the Court of Appeal granted Ngāti Whakaue special leave under art 5(6) of sch 2 to the Arbitration Act 1996 to bring an appeal to the High Court on a number of questions of law.
by John Green
I recall one of my colleagues on the WHRS Tribunal once saying: “so we have to give reasons for reasons” the answer then and the answer now remains the same – yes!
In a judgment just handed down in Ngāti Hurungaterangi v Ngāti Wahiao [2017] NZCA 429 (26 September 2017), the Court of Appeal set aside the award made by the arbitral tribunal saying the reasons given were so inadequate and inconsistent that they fall short of discharging the panel’s mandate to give a reasoned award.
This is only the second time the Court of Appeal has considered the obligation to give reasons. The first was in Casata v General Distributors Ltd, in which the Court noted, in the context of an unsuccessful challenge to an arbitrator’s determination on a rent review, that elaborate reasons were not required for each and every component of an award; and that an expert arbitral panel was entitled to express a conclusory preference for one side’s experts over another.
In Ngāti Hurungaterangi v Ngāti Wahiao the Court has made it clear that while the reasons stated for findings by an arbitral tribunal may not need to be as extensive as may be expected of a formal judgment, they must be sufficiently full for the parties to understand the pathway taken by the arbitral tribunal to reach the result.
- New Zealand -